Exchange Income Corp T.EIF

I'm in the industry and can answer questions

[WayneH5565]

I'll give everyone some perspective from being in the industry, both in airworthiness business of auditing maintenance organizations, engineering organizations, operators and doing financial analysis of capital expenditures:

 

 

Aerospace is a very complicated industry with many specific traits. One incorrect thing in the short thesis is that the cash flows don't cover the dividend. Yes the Ops cash flow minus cap ex is negative. But what EIF does is separates value added capital expenditures from the value neutral cap ex and reports a non-IFRS FCF that is positive.

 

I'll use a comparison to real estate: What most people don't understand is that there is work you can do to an aircraft that is like building a new apartment building and there is work that is like replacing all the windows in an apartment building. One adds value and one maintains value. For example, replacing the wings on an aircraft can significantly extend the life of that aircraft. This is a value added capital expenditure that you would fund by debt and amortize throughout the life of that asset. That activity could be funded by debt or equity. It would be like buying a new aircraft. Upgrading the avionics is another example of a value added activity. I personally spent a lot of time in the engineering world and the finance world trying to get the financial data right in these cases.

 

So, I'm not saying that the accounting is 100% accurate because I would have to go into the company and audit the specific cases, but I think anyone who aggressively says that the company is misleading investors without having access to audit their internal books is somewhat ignorant (by definition of course - not meant to be an insult).

 

I read the complete short thesis, yes it raises some questions, but nothing that hasn't been there before and nothing that based on my investing experience, aerospace experience and financial experience I can't deal with. So again I'm siitting on the sidelines waiting for this thing to get to 20 bucks so I can buy it and double my money again.

 

I'm starting to see a pattern from short sellers now. Most of the time they are wrong, but they can be wrong and still make money. Usually they make money purely from momentum and fear. This was the case in Home Capital which caused a run on the bank. The underlying assets are still performing well in home capital and we have yet to see a housing crash. I bet on that and made a lot of money.

 

The same was the case for citron research and transdigm (TDG) where citron called it the next Valaent. I wrote a three part series on TDG after citron attacked it and it since returned to where it was. It seems to me that short sellers are most likely to be wrong when they don't understand the industry. Another good bet to make a lot of money.

I'm waiting for the shorts to do work for me and make this go to 20.  Then I'll consider it...

Hope that helps,

 

Wayne